Tim Hearden/Capital Press
Francis Pacheco, left, and Elvin Hollon of Dairy Farmers of America talk before the May 1 Assembly Agriculture Committee hearing on Assembly Bill 31. The panel approved a scaled-back version of the bill.

SACRAMENTO -- An Assembly panel unanimously approved a watered-down whey pricing bill May 1 and asked producers and processors to come to the bargaining table to reach solutions.

An overflow gathering of dairymen from around the state listened nervously as the Agriculture Committee considered Assembly Bill 31, which seeks to bring California's pricing formula for milk going to cheese vats more in line with producers' operating costs.

However, language mandating that California whey bring at least 80 percent of the price for similar milk nationwide was gutted from the bill late April 30 as committee chairwoman Susan Talamantes Eggman and others expressed hope that producers and processors would come up with a formula they agree on.

The deadline to move policy proposals to the Senate is May 21, giving proponents about three weeks to develop new bill language.

"This has been an incredibly complicated issue for everyone," Eggman, D-Stockton, said at the beginning. "As we move forward, what we see before us today will not be the final version, and I will stand in the way (of a bill advancing) until this is complete."

The vote essentially keeps the bill alive after Eggman and other committee members have spent the last several weeks talking with interested parties to lay the groundwork for an agreement. Eggman also sent a letter April 29 urging California Food and Agriculture Secretary Karen Ross to come up with a short-term solution for beleaguered producers.

"I am really not a fan of gutting bills and starting over," said committee member Brian Dahle, R-Bieber. "In this case, I think we can develop some good policy here."

Producers have complained that more than 350 dairies have either closed or left the state since 2007 because California's pricing formula hasn't kept pace with escalating feed, fuel and other costs. California's 4b price has been about $2 per hundredweight lower than the dry whey value in Class III pricing in federal milk marketing orders for the last two years.

Dairy farmers bused in from as far away as Tulare and Bakersfield to pack the hearing room at the Capitol here, and more waited in the hall for their chance to come in and briefly voice their support for AB 31.

"It is my hope that I will not be part of the last generation of dairy farmers in California," Elk Grove producer Antoinette Duarte testified. "The dairy producers in California are in crisis. We who are left no longer talk about growth, we talk about survival."

Turlock dairyman Ray Souza said he's suffered five straight years of losses. While he's built up enough equity to survive, younger dairymen have been forced out, he said.

Processors countered a mandated price increase would devastate their industry. They've voiced concerns the bill proposed by Western United Dairymen and authored by Assemblyman Richard Pan, D-Sacramento, takes the highly technical issue of milk pricing out of the regulatory arena and puts it in the legislative arena.

Joseph Lang, a Sacramento lobbyist representing the Dairy Institute of California, said whey was essentially a waste product before processors invested in cheese plants in the state about a decade ago.

"Now that that investment has brought us to the point that we've solved the problem, the question is how do we fairly assess the value of the product?" he said to the committee.

Lang said he has been meeting with committee representatives for the last couple of weeks and said the Institute is willing to help come up with solutions.

"We're here and committed to seeing this through," he said. "There must be short-term and long-term solutions."

Western United CEO Michael Marsh was generally upbeat after the hearing, expressing hope the bill will bring processors to the table.

"The challenge is the cheese processors have refused to negotiate with us," he said. "What this is going to do is allow the bill to move."

Assembly Bill 31

Proposal: Bring California's pricing formula for milk going to cheese vats more in line with producers' operating costs.